Mastering hotel Revenue Management: Expert Q&A on the essential role of pickup and pace

By keeping a close eye on your pickup and your pace.

We sat down with three Revenue Management experts, Virginia McShane, Joshua Clem, and Hudson Wood, to get some tips and tricks for tracking pickup and pace, communicating with other departments, and staying flexible in a dynamic market.

What do pickup and pace mean in the context of hotel Revenue Management?

Joshua:

Your pickup is your day-to-day positive and negative change of the rooms coming in and out of the hotel, whether it's for today or future dates. Pace, on the other hand, lets you compare your performance to a similar point in the past - often the same time last year.

Virginia:

They are both essential metrics in hotel Revenue Management which we look at daily.

Individually, pickup and pace allow us to make informed decisions when we are adjusting our strategy on forecasting or inventory and pricing.

Hudson:

They give us a good gauge as to where we stand versus last year. Whether it’s room occupancy or Average Daily Rate (ADR).

Our General Manager will ask how we are feeling about certain dates, or how we are looking with our rates.

Is it comparable to last year? Are we higher or lower?

Joshua:

Let's say we're looking at May this year. We want to see how we're pacing versus the same period last year. Right now, in April, we're comparing how much we've picked up for May to how much we picked up in April last year.

Do we have a lot of groups? Do we have a lot more transient? Is there an event?

By monitoring this, we determine whether we're pacing ahead or behind. From there, we can drill down and understand what’s working and what isn’t. If we're behind, we can use this information to guide us to what we should do differently.

How do pickup and pace play a critical role in Revenue Management strategy for hotels?

Joshua:

Most hotels' goal is to be better than last year, whether it's in the number of room nights they've picked up or the amount of ADR that they can achieve.

When you're looking at your pace and comparing it to your goals, you can deduce whether you need to focus more on rooms, more on your rates, or more on both.

It helps you to understand where you're positioned so that any decisions that you make are a response to your pace and your property’s goals.

Virginia:

Looking at pace and pickup over different periods helps us make more effective decisions about where to price ourselves for specific time frames.

Hudson:

Typically, we have an ideal starting point. For example, in one of my hotels, I'll start weekdays at $119, compared to $114 last year.

This way, we automatically have a bit of year-over-year growth.

Then, as the months progress, we can adjust our rates based on our pickup and pace to achieve our budget.

Virginia:

The Masters is a major event that happens every year, but not always during the same time frame. We still need to measure how we're pacing in the buildup to the event so we can make critical decisions about when to adjust our rate.

Are we potentially adjusting our rate too quickly, or is it too high? What are the booking patterns? Do they tend to book 60 to 90 days in advance, or only 14 days out?

How does understanding pickup and pace contribute to more effective forecasting and planning?

Joshua:

We use pace to determine if we're ahead in room nights and rates. Last year, for example, we were ahead in our ADR, but we're slightly down this year, so we will need to raise our rates to meet our budget.

Pace helps us determine whether we need to raise or lower the rate or implement different strategies.

Hudson:

I like to keep an eye on the on-the-books occupancy of our hotel throughout the week, starting on Monday and going through to the weekend. This helps me get a sense of how busy we are and what bookings I can expect.

I'm also looking ahead to the following week's bookings to understand how we are pacing.

If there are a lot of rooms booked from Wednesday or Thursday onwards, I know that we will likely get more bookings over the weekend so I can start thinking about raising my rates.

Let’s say we are pacing behind by about 15 or 20 rooms, I will lower our hotel room rates before we get too far behind on bookings.

Even if we're priced at $199, I might lower it to $184 for a day or two to create some urgency and attract more bookings.

Once we get some momentum going, more bookings will follow. Even at a small discount, $184 is still a good rate, and I think it's worth sacrificing a few rooms at a slightly discounted rate to stimulate some booking momentum.

On the other hand, if we're trending way ahead of our market, it tells you a lot of things. First of all, it means that our current strategy and process is working, which is great.

Secondly, it means we can get more aggressive. For example, instead of starting the week at $149, we can start at $159-$164 and still finish the day off $15 ahead before any discounts come through. And that adds up over time.

Virginia:

I would just like to add that while historical data is still very relevant and important to forecasting, we should also be aware that things can and have changed.

The way that people travel is different, the way they book hotels is changing, so we also have to keep up with those shifts and keep evaluating them.

We’ve been using tools like Lighthouse BI and we can see how our lead time has changed over the years and understand how things have shifted over time.

It's important to maintain an open mind so that you can make decisions when things are not exactly the way they were the previous year.

What are some other common misconceptions about pickup and pace in the Revenue Management space?

Virginia:

When we’re looking at pickup and pace, it’s not just about the quantity of reservations that you're picking up.

You have to take into consideration whether it’s a good pickup. Was it at a good rate? Was it a good market mix?

If I receive 50 reservations for a special event through OTAs, opaque rates, or wholesalers, am I truly benefiting from this compared to direct bookings?

Or, if I have 50 group rooms for a sporting event on a standard weekend, where the team may not qualify and there is no attrition, they can cut their entire block over one day with no cancellation policy, which could negatively impact my monthly revenue.

It may look like you are pacing ahead, but that does not necessarily equate to a great performance.

You may be seeing good pickup, but is the quality of what you're seeing truly good? That's often a missing piece.

Joshua:

I think generally speaking too, a lot of people have a misconception that you just want to fill up far out from the arrival date.

We always say you don't want to be the first one to sell out because that probably means you went a little too low on rate.

Ideally, you’d want to sell out your last couple of rooms on the day of arrival so that you're picking up the highest rate possible.

Hudson:

In my experience, it’s easy to be overly concerned with occupancy or ADR pacing.

The primary goal is to exceed fair share for each date, aiming to beat the compset as often as possible.

However, there are always going to be slow days (typically Sundays and Thursdays at my hotels).

To mitigate this, I try to intentionally lower rates to attract bookings and maintain a consistent occupancy rate throughout the week.

I want to avoid significant drops in occupancy from Wednesday to Thursday, as it can create operational difficulties with arrivals and departures.

Instead, we strive for a balance that benefits the property while still achieving fair share, which I think is the right approach.

Can you share some strategies or best practices for monitoring pickup and pace?

Virginia:

Monitoring pickup and pace is a day-to-day process. While special events are exciting and important to consider, for the most part, we're looking at a pickup window of 2 to 14 days in a traditional market without any major events.

We also need to know how we're pacing for upcoming weekends.

For example, are we on track to pick up 20 rooms today, like we did at the same time last year? Should we drop our rates now or later in the day?

We review this information every day and use technology, like the reports provided by Lighthouse, to help us make informed decisions.

Also, when we have revenue strategy meetings we use Lighthouse BI to discuss our pickup over the past seven days and evaluate our pace over a longer period.

We can also look deeper into the quality of reservations and look at individual bookings to see where they are coming from and therefore determine whether we need to make any forecast adjustments.

Getting into the details, and looking at the booking mix, really helps us to understand why there may be deficits or whether the pace is legitimate so we can get a better sense of our true pickup and pace.

Joshua:

I rely heavily on a BI tool and also have regular meetings with the properties I work with.

When forecasting future trends, I always review the data on the BI tool and compare it to the same period of the previous year or the previous year's forecast to gain a better understanding of where we stand. This helps me predict future trends accurately.

It's also vital to check for events that took place last year to understand why you might be lagging in pace.

For instance, during Easter, we observed a decrease in business travel and a slight increase in leisure travel, which doesn't always pay as much.

So, it's really important to know your area and the events that impact demand to understand your business's pace and pickup compared to previous years.

Can you share a real-life example in the day-to-day of a Revenue Manager where actively monitoring pickup and pace significantly improved a hotel's performance?

Virginia:

I once worked with an independent hotel in New Mexico and as we were approaching the busy holiday season, we were slightly behind in pace compared to the previous year. But our pickup had been pretty steady week on week.

We also noticed that our competitors hadn’t been increasing their rates and that our rates were a little on the higher side.

However, we decided to hold our rates because we were only about 15 rooms down compared to the same time last year.

As the holiday period drew closer, one by one, we started seeing our competitors dropping their rates out of fear of not filling their remaining rooms.

Even when a snowstorm hit and competitors dropped their rates by $50 to $100, we kept holding ours.

Despite the snowstorm, we had a successful week and ended up with a 250 RGI based on benchmark data.

We made daily decisions on whether to drop our rates but ultimately maintained them above our competitors because our pickup was great.

Joshua:

I've got a property in Boston, and it's the Boston Marathon this weekend. We did really well last year so the expectation from the ownership group and the hotel is that we will do well again this year.

We had put restrictions in place to spread demand and revenue across the weekend, but we noticed that it was driving rooms away and not generating the same pace as last year.

Although we were seeing a little bit more ADR, we weren't getting the same number of room nights.

So, when we still had some rooms to sell on the day of the marathon, we knew we needed to take off some of the restrictions and lower the rate to beat the room nights we had on Monday last year.

We wouldn’t have known that without keeping a careful eye on our pickup and monitoring how we paced against the same time last year.

Hudson:

I manage a property in Sarasota, Florida, which is just a few minutes from the beach. To ensure we’re getting our fair share in this highly competitive market, we have to be a bit more nimble.

I receive a Daily Glance - which includes pickup and pace data - first thing in the morning to assess the next few days and decide whether we need to adjust our rates.

This approach has helped us gain an extra 3 or 4 points on all indexes, which may not sound like much, but it adds up over time.

I know it can be tedious to check daily especially when we don't always make changes, but it takes 5 minutes out of your day.

It means I am always half a step ahead of the compset, and when I’m getting a few extra dollars over the year, it adds up. It's these small gains that ultimately benefit us in the long run.

How can your daily pickup report be used by other department managers?

Virginia:

We receive the Daily Glance or pickup report every morning which creates interaction between different departments, such as the CEO, owner, management company, director of sales, and general manager.

This report allows us to understand what's happening within the hotel and to have conversations or collaborate on issues that may arise.

For example, my CFO might ask why we lost 500 room nights over a specific period, which allows us to then open up the conversation to include the Director of Sales and the Revenue Manager to discuss a strategy around rates, or inventory to mitigate the effects of a group wash.

This approach is effective because it brings everyone together to have one conversation, rather than relying on separate tools and reports that only go to one person.

Joshua:

The pick-up and pacing reports are really helpful for the operations team, especially when it comes to housekeeping.

It's important to know how many rooms need to be turned over and how many people are needed to do so, especially when the hotel is fully booked for multiple days.

The reports also allow us to compare current staffing needs with those from the previous year.

Ultimately, the reports also help us with the daily operations of the hotel, such as figuring out how many housekeepers we need based on the number of check-ins and check-outs.

What advice would you give to new Revenue Managers trying to get a handle on pickup and pace?

Hudson:

I think the main thing is to ask the hotel for support. That's a big one.

If you are working with multiple hotels, you are rarely familiar with the area or market, so I rely on the hotel to provide me with some of the background insights.

What are the trends? What are the weekends like? What big events do we have? What are the normal booking patterns? Do you get a lot of same-day pickup or is the booking window 3 or 4 days? Or is it two weeks?

The Director of Sales or General Manager is usually familiar with the market, so they can provide me with insider information that I may not have access to otherwise.

The other thing I would recommend when you're starting at a hotel is to just watch and see.

Typically, when I start working with a hotel, I don't really change a lot in the beginning just because I want to hear out the hotel, see what they like to do, and what has historically worked.

I may make changes to discounts or rate plans, but I always make sure to hear out the hotel and take into account historical data before making any decisions.

Virginia:

If you are new to Revenue Management, it is important to understand the major metrics that you should be looking at and become comfortable with identifying them within the systems you have available.

Once you have a good understanding of these metrics, you can start putting them into practice.

Revenue Management involves a lot of testing, where you make educated decisions based on the data you have and discover what works in different markets and for your property.

If something doesn't work, take it as a learning opportunity and try a different approach.

Having access to the right tools can make it easier to make these evaluations. If you have access to tools and resources like those we have within Lighthouse, it is important to familiarize yourself with them so you can use them to your advantage.

The Lighthouse platform offers a range of tools including, Lighthouse BI and Benchmark Insight, within which you can monitor your pick-up, pace, segmentation and market mix.

By utilizing all of these tools, you can make informed decisions that will help your business thrive.

How can technology help you to better understand and manage pickup and pace?

Hudson:

I don't know how you could do my job without a computer or technology at this point. There's just so much data out there, whether it's from BI or another source, and you need something to bring that all together.

The internet is also a great resource because you can find out about things like weather or big events that can impact demand.

For example, if your property is near an airport, things can change in 20 minutes if there's a thunderstorm a snowstorm, or a delay.

And then there are big events like the George Strait concert that was just announced a few weeks ago.

He doesn't tour much, so his tickets sell for about $8,900 a piece, and I guarantee you those hotels near the venue will be about $1,500 a night. I read about the concert back in January when it was just a rumor - I found it on X (formerly Twitter) of all places.

If you don't pay attention, you'll be behind the curve.

Without technology, we'd be really bad and very behind on a lot of things. Right now, we get a Daily Glance every day. I can go into our system and see exactly how we are tracking for the next day at the click of a button.

Virginia:

I think Revenue Management technology has completely shifted the way most hotels make pricing decisions. Whether it's automated or if you have revenue managers like we do, we use technology daily.

We get a daily pick-up report that creates conversations between ownership, management, on-property teams, and third parties.

But then we also use BI to walk through our decision-making process with the property and provide them with data in a non-intimidating way.

It saves us time and creates a more efficient team. We can use tools like Rate Insight to see our competitors' rates in a matter of minutes instead of shopping everyone individually.

It just makes our lives a lot easier and helps us catch things faster than some of our competitors.

For example, our competitors in Santa Fe didn't have the same technology we did, so they weren't able to monitor pick-up pace or rate changes within the market. It makes a huge difference.

Joshua:

I think using BI tools is a lot more efficient than doing things the hard way, where you have to pull reports from six different places and spend a lot of time looking for information.

Lighthouse BI is a one-stop shop. Everything you need is right there so you can make better decisions in a more timely manner.

I couldn't imagine having to rely on the old, slow computers at hotels and the inefficient programs they have. It would be tough.

But technology makes our job a lot easier when it comes to understanding what's going on and making decisions, which is ultimately what helps us to grow our property’s revenue.